PTO vs vacation: what is the difference?
Last updated on: December 23, 2021
Are you ready for a vacation? Just imagine: beach, sand, palm trees, your favorite cocktail in one hand and ice cream in the other. The sun is shining, you’re feeling a summer breeze on your face, and you’re perfectly relaxed.
But before you clock off work and head to your well-deserved break, you need to request vacation days. Or is that a PTO request? Is there a difference?
In this article, we’ll learn what PTO is, what’s the difference between PTO and vacation, and we’ll answer the most frequently asked questions regarding taking time off.
What is PTO?
PTO is an abbreviation for paid time off; it’s an employee leave policy that refers to the time you take off work with no loss of pay. In some companies, PTO includes vacation days, sick days, personal days, and holidays all in one, while in others they are treated separately.
There are different PTO policies:
- Accrued days: A number of days off an employee is allowed to take is directly proportional to the number of days the employee has worked. It’s up to the company how many days off they get to accumulate each week or month.
- Bank of PTO: Employees are offered a fixed number of leaves all at once. It usually resets on January 1st or, in some instances, on the date they started working. With this policy, there is no separation between categories (vacation, sick leave, personal days off). This is the most common PTO system.
- Unlimited PTO: Employees can take time off whenever they need it, as long as it doesn’t interfere with their work. There’s no maximum number of days they can take. Unlimited PTO is a relatively new concept and very few companies have this policy.
- Time Off in Lieu (TOIL): Employees earn their time off based on their overtime work, as an alternative to getting paid for those hours.
A good PTO policy can be one of the main benefits that will attract potential employees, so it’s not something that should be made with no effort, just for the sake of being done; many would accept slightly lower pay in exchange for a generous PTO plan.
Another important thing regarding PTO is tracking your time off, just like you would track the time you spent working. By doing that, you make it easier to manage holidays and vacations, as well as track accrual and balances. It’s best to use a time-off and vacation tracker for that, as it’s fast and easy to use.
💡 For a detailed explanation and a step-by-step guide, check out How to track your team’s time off.
Things you should ask about your company’s PTO policy
When you start working in a company, you should either look up in the employees’ handbook or ask HR the following questions:
- What is the maximum number of days you can take?
- Is there a limit to how much PTO you can take at once?
- What will happen to the unused PTO? Can it be rolled over into the next year?
- What kind of notice do you need to give beforehand, and how far in advance?
- If you resign or your contract is terminated, will your unused PTO be paid out to you?
PTO vs vacation days
Sometimes these terms are used interchangeably, but they’re not the same. The main difference between the two is that PTO is a broader term than vacation. Vacation is always PTO (its subset, if you will), but PTO doesn’t always have to be for vacation.
Vacation is specifically for taking a break, with or without the family. PTO, on the other hand, covers any paid time off: maternity and paternity leave, personal days, mental health days, jury duty, etc.
Vacation requires an approval procedure and has to be requested in advance. That provides information about the absence which facilitates future work planning for the employer.
Vacation days are sometimes not included in PTO – policies differ between companies or depend on the laws and regulations of your state/country.
PTO vs sick days
Just like differentiating between PTO and vacation days, PTO is a broader term. When an employee takes sick days off, they are required to provide doctor’s notice as a proof of an illness. Since illnesses are unpredictable, sick days are the hardest type of absence to manage.
In most states, employers don’t have to pay their employees for the unused sick time when they leave the company, whereas a lot of PTO policies require them to pay out the accrued PTO.
In the USA, paid sick leave is not regulated by federal law, while in Europe it is regulated by law. All members of the EU require businesses to offer paid sick leave – the number of days differs from country to country.
In some countries like Japan, workers are generally not offered sick days due to their ruthless work culture – “if you can walk, you can work.” If they can’t walk, they can either use their vacation days or take unpaid time off.
Is PTO better than vacation and sick time?
Is it better to have a PTO plan (mostly a bank of PTO) or separate vacation and sick time? Each has its pros and cons.
- PTO plans allow more flexibility and privacy, as employees don’t have to disclose why they are taking the time off work.
- It ensures that everyone has access to the same amount of time off, based on the time spent working in the company.
- If you’re an overall healthy person, this is a great option for you, as some sick days (that would otherwise be unused) can now become extra vacation days.
- A bank of PTO is better in multicultural environments, as it’s more inclusive. It allows each employee to take time off to celebrate their holidays, even if they’re not widely celebrated in the place they live.
- It’s also less of an administrative headache.
On the other hand, some employees might feel the need to come to work when they’re sick so they can have more vacation time, which wouldn’t happen if the two were separated. As you can’t predict illness, it can be tricky to plan out your days off, or you may be afraid to use them in case of a future emergency. Another scenario is a less cautious employee using all PTO on a vacation – what can they do if they get sick?
Moreover, switching to a PTO plan can result in having fewer days off, as well as using them up quicker.
Most common concerns regarding PTO
There are some frequently asked questions about PTO and using your days off; we’ll try to clear away any confusion.
How many hours of PTO is normal?
“Normal” differs from country to country.
In the USA, the average number of PTO for private-sector employees who have completed one year of service is 10 days, according to the Bureau of Labor Statistics (BLS). That number doesn’t include sick days and paid holidays. The average number also depends on the industry, years of service, and region.
In most advanced economies (except the USA), the amount of paid time off is defined by labor law. Most countries in the world have an average of 20 days of minimum annual leave, not including paid public holidays. Some countries have 30, like Andorra, Bahrain, Burkina Faso, Kuwait, Panama, Peru, and United Arab Emirates.
In Russia, employees are entitled to 28 days of paid annual leave and 14 paid public holidays, with additional 5-24 days if they work in the Far North or the Far East zones.
Can I use my PTO whenever I want?
A general theme of these questions and answers is: depends on where you live and what company you work for. Keep in mind that PTO rules are not universal and always double-check the PTO policy in your specific place of work.
However, you should generally be able to use PTO whenever you want, given that you got the approval from your supervisor. Your days off may not be approved if that period is particularly busy or another coworker is off work at the same time.
If you’re a new hire, you may have to wait a certain amount of time before you can start using your PTO, usually around 6 months.
How far in advance should I request PTO?
As far as you can, the earlier the better.
It’s best to consult the employees’ handbook to see when is the latest you can request time off. Some companies require two weeks’ notice, while in others you need to place your request at least 30 days in advance. In some places, you need to submit a request 3 or 6 months earlier.
Can you be forced to work during PTO?
Generally no, but it depends on your contract (I hope you read the fine print too).
What happens if I don’t use my PTO?
First of all – you should definitely use your PTO. Life is not just about work and taking time off is beneficial to your mental health and overall well-being. Also, overworking affects productivity – and not in a positive way.
If you firmly decided that you don’t want to use those days off, these are the possible options:
- Days you haven’t used (or at least some of them) will carry over into the next year;
- You will be able to “cash them out”;
- You will lose them – that’s the so-called Use-It-Or-Lose-It policy.
It’s very likely, however, that it won’t be you who’ll get to decide between the three, but your company’s policy or the laws in your state.
Can I take time off without PTO?
What happens if you run out of your PTO? Can you take time off without it?
Well, you can take unpaid time off. As the name suggests, it’s the time taken off work not compensated by an employer. UTO policies, just like PTO policies, differ from company to company; some may offer it instead of PTO. That is frequent in countries such as the USA, where employers have no legal obligations to provide paid vacation time.
Another alternative is to make up for a lost time, in case of a short absence. That requires staying late hours, coming in earlier than usual, or working on your usual day off to balance out the sum of your working hours per week. You just need to check if your place of work allows for that arrangement.
PTO policies vary from company to company, even from country to country. Because of that, there are no universal PTO rules and regulations – they heavily depend on your specific place of work, which is why you should always double-check general information provided online.
But two things are for sure – 1) it’s important to be informed about PTO policies in your company and 2) not using your days off and taking some time to relax is a mistake. You deserve that break!
✉️ Do you prefer PTO or having vacation and sick days separate? What is the PTO policy in your company and what do you think about it? Let us know at email@example.com and your answer may be featured in one of our future articles.